Kerry a rare beacon of hope
The group achieved a 7.1% annual earnings growth, and its balance sheet remains in good shape, with no debt repayments scheduled for the next two years.
The group’s management skills were reflected in growth figures higher than other companies in the food ingredient sector, now Kerry’s main activity.
Kerry, our largest food company, also brought encouraging tidings of 2009, predicting that profit may rise as much as 7% this year, as energy costs decline.
Kerry is one of the few Irish public companies which will pay shareholders a dividend this year, and its stock has gained 12% this year, while the Irish stock market in general has declined 15%.
The Tralee-based company’s impressive performance shows that food can be a recession-proof sector. But it was achieved against the odds, with management revealing a record increase in raw material costs and predicting further cost increases for the first half of this year, a consumer trend towards better value food, and worries over the decline of the British pound.
Inevitably, not all divisions progressed equally, with European dairy activities “suffering”, but other sectors of their widely diversified business sustaining Kerry.
Chief executive Stan McCarthy said Kerry was able to successfully navigate its way through very difficult economic times globally, and its more than 5,000 workers in Ireland are very, very secure. However, significant volume changes in any sector would have to be addressed — as they were recently at the meat plant in Shillelagh, Co Wicklow.
Kerry is seeking to cut 70 of the 820 jobs there through voluntary lay-offs, because of “competitive conditions” in the market, and a slowdown in demand for their products.
Unfortunately, Ireland’s smaller food companies face the same problems as Kerry — such as tremendous cost pressures, consumers cutting back, and the disastrous exchange rate for exporters to Britain — and are much more exposed to Ireland’s credit crunch, tax increases and recession.
Many of them are not as well positioned financially as Kerry Group. Even the Irish Dairy Board, our biggest individual food exporter, is complaining about very tough constraints on credit availability.
